Response to Comment by tbarbone

You are so right that if you are unsure of a change like this you are doomed to fail. That's why we worked with Strategies consultants to educate us and the team and help us through the switch. On their website www.strategies.com you can order Neil's white paper on Team Based Pay that explains it much better than I can.

In answer to your specific questions - in our Bonus Bucket system, yes, we only paid out bonus when $100,000 in sales was hit. There are other methods you can use - choose the one that makes the most sense to you (there's a blog post on options).

My team determines the eligibility criteria. They chose - 1)must be in dress code every day 2) cannot have had an unplanned absenses during the bonus period 3) Must be on time daily. As far as PLANNED absenses go, our plan allows bonus to be paid at a reduced rate if someone is out for part of the bonus period.

Our individual targets are not used for bonus purposes but come into play when we give raises out. We earn raises together as a team, but they are allocated out based on individual merit. Individual goals/targets are things like prebook rate, new and repeat client retention, retail, etc.

We have been on TBP since October 2007 and I am still a big fan. When the economy tanked we suffered less because we could control our cost more (we cut back our hours for sale by about 15% to more closely match demand - after 2 months of this we were back to normal scheduling). In commission salons, stylists were fighting over clients because it was the only way they would get paid. My people knew they would be paid (although maybe for 4 hours less per week) and they maintained the high level of service our clients expect.

My technicians make more than they did before, but payroll cost as a % of sales is less than it was before.

I have no divas. Everyone has to pull their weight or they will not get a raise.

More stability for technicians. Since January 2009 we have had 8 babies!!!! My technicians take maternity leave knowing their regular clients are in good hands. We pay maternity leave because with the clients still coming in we can afford to pay the technician. When she returns, she gets her regular rate of pay just like before - she doesn't take a step back in compensation like she would on commission because some clients chose to stick with another stylist.

Greatest obstacles -

1) fear of change - yours and theirs

2) divas already in the business that don't want to have an even playing field

3) mentality in the industry that these are MY clients, not OUR clients and that the technician OWNS the client

4)lack of trust - if they don't trust you as a leader they will think you are just trying to rip them off. When we switched, they weren't so sure if they should trust me. They do trust me now. (the nay-sayers left a long time ago).

5) The process NEVER ENDS. You are always educating, coaching, reinforcing, reminding.

Cindy